Won the Lottery? – What to do so that you never have to work again – $1,000,000
Have you ever imagined what life would be like if you won the lottery? I’m sure you have. We’ve all had those conversations.
I’ve wanted to write a post about winning the lottery for a while now.
For the sake of this post, I am choosing a $1 million lottery. I am assuming that I have 1 million dollars after taxes.
I am choosing this number for the challenge, and since 1 million is a realistic net worth target for me in decades down the road. I wanted to choose a number that forced me to be intentional.
While some people would continue jobbing if they won the lottery, I would most definitely stop.
I know I’d stop because I’d be able to generate enough income through dividend investing. Plus I could generate income by side hustling and blogging. I will never truly stop working.
Overall, my approach to receiving 1 million dollars would be focused on setting myself up to become a full-time blogger and dividend investor.
$900,000 left.
To protect 10% of the money and to have an emergency fund, I would immediately set aside $100,000 into an easy-to-access account that pays interest.
Even though it’s not a lot, a 1% interest rate would still add an extra $1,000 to my pocket annually. I might even be tempted to lock a portion of it up in a GIC at a higher rate.
More importantly, though, this would be backup money incase an emergency happens, and this would force me to set aside a good chuck of money to not be stupid with.
$500,000 left.
I will still require income to live off so I’d invest a good chunk of this money. Allocating and investing money would become my full-time job along with blogging.
As such, I would set aside $400,000 for investing. I would max out my TFSA, hold at least $200,000 in a non-registered investment account, and the rest would be invested in an RRSP. Of course, that would be after consulting an accountant and dependent on how much contribution room is available.
Furthermore, I already have a rough plan on how I would balance the portfolio for income. At the very least I’d need to earn 20k annually to live off. I know this does not sound like much, but my expenses would actually decrease after I paid for a house and car with cash.
The main challenge would become capital preservation and diversification. I mean, I’m not just going to invest $400,000 into the market all at once. That would be crazy.
Ultimately, my plan would be to create a list of securities and watch for buying opportunities.
- $25,000 S&P 500 Index Fund: Generates $500 annually based on a 2% yield.
- $25,000 for index funds for income and diversification: Aim to generate at least $500 annually
- $100,000 in Canadian Bluechip dividend stocks: Generates $5,000 annually based on an average of 5%.
- $100,000 in USD Bluechip dividend stocks: Generates $3,000 USD annually based on an average yield of 3% annually.
- $50,000 for riskier, higher income producing assets: Generates $4,000 based on 8% yield.
- $50,000 for REITS: Generates $2,500 annually based on a 5% yield.
- $50,000 for 6% or higher investments: Generates $3,000 annually.
Total income $18,500
Obviously $18,500 annually is not a lot to live off. But if you consider that I would have no mortgage/rent or commuting expenses, it starts to seem possible . Shelter and transportation are usually 2 of the 3 largest expenses. The other is food. I would basically be paying for groceries, pleasure, reinvesting, utilities, internet, cell phone service, gas, insurance, hygiene, property taxes, dental/health and a few other miscellaneous costs.
Furthermore, $18,500 is not the end—it’s the start. This is the basic income that will provide me with the framework to blog and invest full-time. The dividend income will increase through dividend raises and reinvesting. As for the blog, I can begin to offer a product or service for sale and make it more clear. Then I can spend a few hours per day selling it. I could send e-mails, DM’s and approach blogging in a more profit-seeking way.
$150,000 left.
Owning real estate would be another important component of my plan to make a million last the rest of my life.
It would allow me to acquire another asset that will hopefully increase in value over time, and it would lower my overall monthly expenses through eliminating rent or the price of a mortgage.
Of course, $350,000 does not go very far in Toronto so I’d buy outside the city. I’d likely go East because of friends and family.
Ideally, I would buy a brand new home with at least 2 bedrooms and 2 bathrooms. It doesn’t need to be very large. I just need a space for an office and a backyard to barbecue.
$125,000 left.
Since I wouldn’t be living off the income generated by the portfolio in the first year, I would set aside $25,000 to pay for living costs and any other unexpected expenses.
This amount could be used to pay for any other item(s) I forgot on this list.
$115,000 left.
I’ve always enjoyed new clothes but I don’t buy myself enough anymore. To be honest, I usually just don’t leave myself enough extra money after saving to buy new clothes. It’s too difficult for me to cut back on my monthly savings—I keep it automatic.
However, every once in a while I get fed up and end up going on a shopping spree. Ultimately this cycle works because it has led to increased savings overall.
Anyways, I’d set aside $10,000 to spend purely on clothes if I won the lottery. I probably wouldn’t travel to buy clothes at this point, though. I’d just order some stuff online and then go shopping at my preferred spots.
$109,000 left.
This should go without saying, but I would eliminate my student loan debt immediately.
This would ultimately free up extra cash flow for investing. I’m looking forward to paying this off in the near future regardless of winning the lottery.
$106,000 left.
I currently have the older version of the MacBook Air and wouldn’t mind a new one solely based on the retina display. The display on the older generation MacBook Airs is subpar. It has become more noticeable as smartphone displays have advanced.
As such, I would purchase a new MacBook Air or MacBook Pro. I’d have to do some research to know for sure but I would try to spend $3,000 or less.
$103,000 left.
I’ve wanted a more advanced camera for a long time now.
I used to have a decent Canon Point and Shoot but I sold it online for investment money.
Since then I’ve used iPhones and more recently a Samsung to take photos. Although cellphone cameras have come a long way, they are still behind the technology available in mirrorless cameras.
So if I won the lottery, I’d get a mirrorless camera because I want the full camera experience. I’d try to keep the purchase to $3,000 or less.
$75,000 left.
I wish I was able to set aside a larger amount for gifts. However, $28,000 is an appropriate amount for someone that’s chasing FI.
In turn, I would set aside $28,000 for a range of gifts and dinners for friends and family. There would be cash gifts of $1,000 to $5,000, and just some extra money to have fun.
$65,000 left.
Similar to what I mentioned above, I wish I could set aside more for charity.
But I think $10,000 is a generous place to start. I would also plan to give more on an annual basis if I was ever so fortuitous to be a millionaire.
In regards to the charity, I would most likely choose to donate to an organization that is focussed on children and/or mental health.
$40,000 left.
One of the first things I’d want to do if I won the lottery is travel.
There are still so many places on my list to visit: Europe, St. Lucia, Bahamas and more of Canada to name some of the destinations on my list.
Since I enjoy blogging and investing so much, ideally, I’d go away for multiple 1-to-2 week vacations after winning the lottery. After about a week or so of being away, I’ll just get bored and want to work on blogging anyways.
$15,000 left.
It’s unlikely that I’ll own a car again until I’m out of the city.
In the scenario that I win the lottery, though, I would need to purchase a car to get around in the boons. I would need a car to get groceries and to get around because transit would be non-existent.
Because I’m not an expert with vehicles, I would likely purchase a new or quality used car with a warranty.
Lastly, I would set aside $15,000 to improve the blog.
I would spend the money on graphic design, services like TailWind, an improved hosting package and potentially product development.
In addition, I would spend some money on Instagram, Facebook and Google advertisem*nts.
This was a fun experiment because I enjoy deciding how to allocate money in general.
Even though this was about winning the lottery, it was a good excercise because it allowed me to create a plan for managing a net worth of $1,000,000, which is actually realistic number by the end of my career.
Moreover, the main takeaway I realized through writing this post is that my plan wouldn’t change at all….
You could give me a million dollars right now and I’d do the exact same thing.
Instead of saving and investing my way towards financial independence, I’d be able to live my dream life right now.
I guess that means I’m on the right path.
